Kenyan construction boom sees sharp rise in steel demand

From massive infrastructure developments to middle class housing, construction has led to an increased demand for steel, writes Mwangi Mumero

Steel rolls. (Image source: Jean-Etienne Minh-Duy Poirrier)
Data from the Kenya National Bureau of Statistics indicates that steel imports have grown by more than 100 per cent in the past five years from US$263 million to $538 million.
This has been driven by increased investment in the construction sector and infrastructure projects with the value of building plans approved rising by 18 per cent over the same five-year period.
Overall expenditure on road projects rose from $850 million during the 2009/2010 fiscal year to $1.13 billion in 2010/2011.
Steel companies have also benefitted from the wider East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) markets.
“Statistics show that metal and steel products are currently Kenya’s largest manufactured goods exported within the COMESA and the EAC”, said Betty Maina, chief executive officer at the Kenya Association of Manufacturers.
Steel from Kenyan companies is being bought by Rwanda, Tanzania, Uganda and Democratic Republic of Congo.
The major Kenyan steel dealers include Athi River Steel Ltd, Brollo Kenya Ltd, Devki Steel Mills Ltd, Accurate Steel Mills Ltd, Elgo Steel Fabricators Ltd, Iron Africa Ltd and Simba Products Ltd.
Kenya's annual demand for steel is estimated at about 480,000 tonnes to 600,000 tonnes.
Most of the iron to make the steel is imported from South Africa, Japan, India and China.
The local steel sector makes a variety of products from local and imported steel scrap, steel billets and hot rolled coils.
The country imports and exports steel billets, coils, wire rods, steel plates, sheets and pig iron.
Most of the steel products end up being sold on the domestic market, however, mainly by the construction industry.
“We have noted an increased demand for steel rods, sheets and other products in the last five years,” said Harrison Mungai, a hardware shop dealer in Kitengela, on the outskirts of Nairobi, and one of the areas currently experiencing huge housing investments. “Most have ended up in the fast growing middle class housing in the nearby estates.”
Dealers note that over the last two years, the price of the twisted bars – an integral part of beams used to make reinforcement frames for tall buildings – has increased by 25 per cent from $1.2 to $1.5 a kilo.
With these price hikes, the cost of steel for a three storey building – requiring five tonnes of steel – has risen from $5,250 to $7,500, a 43 per cent rise.
Rising demand for steel products has also led to huge investments in the sector as firms position themselves to profit from the burgeoning local and regional markets.
Recently, the government-owned Numerical Machining Complex announced plans to set up a steel plant at the cost of $62.5 million.
The steel plant will be set up at the Athi River and will also support automation of the steel melting process for mass production and establish a metal research laboratory.
The firm plans to expand melting capacity to 21 tonnes per hour. When fully automated, its casting and moulding capacity will produce 15 tons per hour, translating to 100,000 tonnes annually.
Officials from Posco Steel, a Korean company and the third biggest global steel manufacturer, say the firm plans to establish a $3.75 billion investment steel plant in the country.
A local player, Devki Steel Mills has also announced plans to set up a $175 million plant in Kitui to mine and process iron ore deposits in the county in what could result to a major source of steel as well as employment to the local youth.
Iron ore also exists in Taita, Meru, Kilifi and Samia regions of Kenya, prompting the government to encourage industrialists to tap into this readily available raw material.
On a smaller scale, a Mombasa family-based business has invested $16.25 million in a new steel mill. The Mazeras-based firm has the capacity to produce 84,000 tonnes of steel per annum.
Steel firms have however lamented the high cost of transport, power and petroleum products.
“Government needs to put in place proactive measures to reduce cost of power to make the steel industry competitive,” said Kennedy Muga, a director with steel dealer, Process Express. “The government also needs to support incubation in export promotion zones.”
The Mombasa-based firm plans to expand to Uganda, Rwanda, Burundi, DRC, Zambia and Angola. It is also working with Kenya’s Export Promotion Zones to enter the lucrative South Sudan market.
To encourage the sector’s growth, the Ministry of Industrialisation, has allowed investors to set up their own mini thermal electricity generation plants to supplement demand.
The East African Community secretariat also banned the exportation of scrap metal meaning accessible to cheaper raw materials.
Global demand for steel is expected to surge in the next two years, buoyed by increased consumption from key emerging markets such as China, India, Brazil and Russia, which will increase the prices of imported steel and steel products even further.

Mwangi Mumero

source: http://www.africanreview.com/manufacturing/metals/kenyan-construction-boom-sees-sharp-rise-in-steel-demand

BHP Cuts China Steel Forecast to 1 Billion Tons

 BHP Cuts China Steel Forecast to 1 Billion Tons

Steel production in China will peak at less than 1 billion metric tons as the world’s biggest producer accelerates its transition to a consumer-driven economy, according to a new forecast from BHP Billiton Ltd.
Production will peak at between 935 million and 985 million tons in the middle of next decade, the Melbourne-based company said Tuesday, when reporting profit plunged 52 percent. The prediction is as much as 15 percent less than its May estimate that output would peak between 1 billion and 1.1 billion tons in the mid-2020s.
The revision by BHP, the world’s biggest miner, contrasts with rival Rio Tinto Group whose most recent forecast is that China will produce 1 billion tons of steel by 2030. The largest mining companies have been wrong-footed on slower growth in China, Glencore Plc Chief Executive Officer Ivan Glasenberg said last week, with demand getting tricky to call.
“Our most recent analysis suggested a slight reduction from what we previously spoke about,” BHP CEO Andrew Mackenzie told reporters on a media call Tuesday. “That’s really because the Chinese as we expected are managing the move from investment to consumption I think very sensibly.”
Mining companies are confronting a commodities slump that’s hurting profits and shares amid concern that China’s deepening slowdown will undermine demand and exacerbate supply gluts from crude oil to iron ore. Chinese steel production declined 1.3 percent in the first half for this year, triggered largely by a slowing construction sector, BHP said.

Lower But Longer

“Most people in the market will tell you that China’s steel production and demand have peaked” Xu Huimin, an analyst at Huatai Great Wall Futures Co. in Shanghai, said by phone. “Mining companies are usually the most optimistic about demand conditions. For them to start cutting back outlook just reaffirms that the slowdown in China is worsening.”
The price of iron ore lost 40 percent in the past 12 months as BHP, Rio and Vale SA expanded low-cost output, seeking to boost sales volumes and cut costs, just as demand from China faltered.
Ore with 62 percent content sank 5 percent to $53.28 a dry ton on Monday, a four-week low, according to Metal Bulletin Ltd. The commodity, used to make steel, bottomed at $44.59 on July 8, a record in data going back to May 2009.
“We expect moderate but sustainable growth in Chinese steel production over the next decade,” BHP said in the earnings statement. “An extended view on the life cycle of steel usage has resulted in a lower but longer plateau for crude steel production.”

Exports Soar

After decades of rapid growth spurred an unprecedented expansion in steel production, China’s now grappling with excess capacity as a property-led slowdown crimps demand. Weaker domestic consumption prompted mills to seek overseas buyers, sending exports 27 percent higher to 62.13 million tons in the first seven months.
Although China’s steel shipments are at an all-time high, BHP expects subdued crude steel production growth over the remainder of 2015, with some upside potential should the construction sector recover.
About 100 million tons of low-cost iron ore supply will be added this year, outpacing demand growth and forcing less competitive miners both within and outside of China to close, according to BHP.
“We don’t find China impossible to read,” Mackenzie said. “We’ve been at this game for decades and I think, by and large, we’ve made forecasts about the development of China and we’ve made very sound business decisions off those forecasts that have proved to be correct.”

Nervousness of steel

Nervousness of steel

A wave of cheap Chinese metal exports hits the region.

IN THE minutes from the Australian central bank’s latest meeting, one third of the text was devoted to analysing China’s economy and markets. Little wonder. China’s seemingly bottomless appetite for steel has sustained Australian growth over the past decade. With Chinese investment now slowing, those fat years are over. This helped to undermine the economic credentials of Tony Abbott, who lost his job as Australia’s prime minister on September 14th.

China’s steel consumption is roughly half the global total. It peaked in 2013, and ebbed as the country’s frenzied building slowed. Daniel Kang of J.P. Morgan, a bank, forecasts that China’s annual demand for steel will continue falling until 2017 and will settle at about 10% below its high-water mark.
That may not sound like a big drop but it has left Australia with a major hangover. It is the world’s biggest exporter of iron ore, the main ingredient in steel, and its miners had assumed that China would sustain its ultra-fast growth. Instead, iron ore prices are nearly two-thirds lower than two years ago.

Demand for steel in India and South-East Asia has started to improve, but is far from enough to replace the Chinese shortfall. The declining value of Australia’s exports has become a drag on growth. As mining companies cut costs and cancel projects, the eventual impact on the economy could be even worse. Adding to the pain, Australia’s coal exports to China have also plummeted, hit by China’s industrial slowdown and its shift to cleaner energy.

But compared to other Asian states, Australia is still the lucky country or, better said, the less unlucky one. It has a wide mix of commodities. While Indonesia, for instance, relies on fossil-fuel exports, Australia can turn to milk and meat. The weaker Australian dollar is luring even more Chinese tourists. Moreover, Australian miners have less to fret about than do steelmakers in Japan, India and South Korea.

The latter not only have little hope of selling steel to China, but must now compete against shiploads of cheap Chinese metal (see chart). With so much excess capacity, China is likely to ship more of the metal abroad this year than Japan, the world’s second-biggest producer, could make if its steel mills were running at full capacity. India and South Korea, the world’s fourth- and fifth-biggest producers, have imposed anti-dumping duties to repel Chinese imports.

As steel prices fall, Australia’s biggest miners are using their high-quality, low-cost iron ore to take a bigger slice of the global market. For them, it does not matter much who is making the metal, so long as it is still being made

 

NAM KIM STEEL GROUP MANUFACTURER

Tel: +84650 37 9999 2 (Mr. Joshua)
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Global steel output slips for fourth consecutive month in August

Global crude steel output fell for a fourth consecutive month in August, mainly due to lower production in China and Japan, the world's biggest and second-biggest producers, industry data showed on Monday.
August output dropped 3 percent to 132 million tonnes from a year ago, with China output down 3.5 percent at 66.9 million tonnes, and Japan down 5.8 percent at 8.8 million tonnes, World Steel Association (Worldsteel) data showed.
China accounts for about half of global steel production. Its output has been falling as its once stellar pace of economic growth slows, leaving it with steel over-capacity estimated at around 300 million tonnes.
The country has been exporting steel at record levels as a result, a factor that has helped pushed global steel prices to their lowest in more than 10 years, with little prospect of a near term recovery.
As a case in point, the data showed global capacity utilisation rates fell 3.6 percent to 68 percent in August -- marking a decline in mills' pricing power because of their collective ability to increase output if demand recovers.
Elsewhere, the data also showed output in the United States, the world's third-largest producer, fell 10 percent as mills there battle cheap imports and labour disputes, while output in India, the world's fourth-largest producer, rose 2.8 percent.
India, home to about a billion people and with a growing economy, is one of the few bright spots for world steel demand.

(Reporting by Maytaal Angel; Editing by Mark Potter)

NAM KIM STEEL GROUP MANUFACTURER

Tel: +84650 37 9999 2 (Mr. Joshua)
Mobile/Viber/Whatsapp: +84 169.949.3.696
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What is the solution for Anti dumping coated steel coil in US market.

What is the solution for Anti dumping coated steel coil in US market ?

What is the anti dumping ?

Dumping is said to occur when the goods are exported by a country to another country at a price lower than its normal value. This is an unfair trade practice which can have a distortive effect on international trade. Anti dumping is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect. Thus, the purpose of anti dumping duty is to rectify the trade distortive effect of dumping and re-establish fair trade. The use of anti dumping measure as an instrument of fair competition is permitted by the WTO. In fact, anti dumping is an instrument for ensuring fair trade and is not a measure of protection per se for the domestic industry. It provides relief to the domestic industry against the injury caused by dumping.

What happen is in US market right now?

a. The steel is slow down

China mil is exporting to US market around 2Milion tons Mts/year. What will happen if they are applied anti dumping ? So they need to down the price to push the US customers buying their product and the  China goverment support exporting by currency so once again the price is down. BUT this is very risk for US mil steel because what happen AD apply while the product are shipping? US mil steel will be charge import tax around 100%.

b. The mil steel in US is worry about the supplier when Anti dumping apply.

Many mil steel in US are worry about the anti dumping apply, they do not have any suppliers to import. And the market will be explosive the price.

What is the solution for US mil steel?

 a) Market Analysis/trend as per perspective’s view

Since the coated products AD case has filed against China, India, Italy, Taiwan, and Korea, traders or end-users
in US have stretched its buying sources competitively throughout the globe.  As a result, the below countries
have been identified as a possible new source as followings; 

  Vietnam – There are 8 Re-Rollers in the country and most of US traders are coming in and pretty sure all of the re-rollers are busy to accommodate or provide them some hospitalities as well in hope of
expanding its market share in the US. ( I will explain it more in depth of Vietnam mills’ Pros & Cons
later paragraphs)

  Brazil - Not the best option as of yet for its delivery issue. Price are competitive with a bit of lack of its quality.

  Japan – Although there is possibility to import but there is very few selected mills that are willing to expand its products to the US market. Quality is there but price is not competitive. Look out the
Japanese currency situation which is pretty weak but how long it will be sustaining it….

b) What is the best solution for US mill steel when Anti dumping applying,

As the analysis you can give the decition on yourself. so if you want to know more about the Vietnam mil steel market I will update more information in this blog or you can contact directly to me as below:

NAM KIM STEEL GROUP MANUFACTURER

Tel: +84650 37 9999 2 (Mr. Joshua)
Mobile/Viber/Whatsapp: +84 169.949.3.696
Skype: thaiphikhanh_bily
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Search on google:

What is the solution for Anti dumping coated steel coil in US market

Anti dumping mil steel in US and solution in near future for Anti dumping

Anti dumping applying
Anti dumping mil steel in US market

How to rebate tax from china mil steel

Is Chromium the new Boron in China?

As we were informed by one of our Chinese Steel mill  friends, some mills are attempting to add Chromium to their steel so they can call carbon steels “alloy” and qualify for export rebates.
The funny thing is, customers are wary of wire rod with Cr added.  Why? Well, I’m no metallurgist, but I do know Cr is considered a “tramp element” in carbon grades of wire rod.
If the producer uses an electric arc furnace and melts scrap, Chromium (Cr) will be higher than a mill that uses either BOF steelmaking or DRI.

Electric Arc furnace

Any Cr in the melted scrap will remain in the steel, whereas in BOF or DRI based steelmaking, you have clean steel without Cr, unless added to make a specific grade of steel.  Customers making fine wire or severe bending or making fasteners many times put a limit on the acceptable Cr level as it makes the steel more brittle or less ductile in their applications.
Could Cr be okay for rebar?  Yes, this application is much less critical.
But already some news sources are reporting reluctance to buy Cr added grades.
One mill offered Cr-added rod at $380/mt FOB, but customers did not want to take the risk because of quality concerns. Other mills are offering Boron added wire rod for about $410
Most Chinese mills are BOF, so in order to create these grades, they will need to add Cr to the molten steel.

Customers so far are reluctant to try this.
Stay tuned for the rest of the story!

Get more information at:

NAM KIM STEEL GROUP MANUFACTURER

Tel: +84650 37 9999 2 (Mr. Joshua)
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US Steel Mills file dumping suit against Cold Rolled importers from 8 countries

US Steel Mills file dumping suit against Cold Rolled importers from 8 countries

US producers of cold-rolled sheet steel filed unfair trade cases today against imports from eight countries alleging dumping margins as high as 320% and making illegal subsidy allegations as well.

The cited countries and their alleged dumping margins are as follows: Brazil (50-60%), China (266%), India (42%), Japan (83%), South Korea (93-176%), Netherlands (47-136%), Russia (69-320%), and the UK (48-84%).

Countervailing duty petitions against alleged subsidies were filed against Brazil, China, India, South Korea and Russia.

While announcing the trade action against cold-rolled coils, AK Steel said US CRC producers “have been facing a surge of what we believe are unfairly dumped and subsidized imports.”

AK was joined in the filing by ArcelorMittal USA, Nucor, Steel Dynamics and US Steel.

Imports of CRC from the eight countries targeted by this case increased by 120% between 2012 and 2014, from 798,000 tons to 1.75 million st.

In January-May this year these imports totaled 790,361 st, up from 548,835 st in the same period last year, according to AK’s release.

 

  Get more information at:

NAM KIM STEEL GROUP MANUFACTURER

Tel: +84650 37 9999 2 (Mr. Joshua)
Mobile/Viber/Whatsapp: +84 169.949.3.696
Skype: thaiphikhanh_bily
Email: khanhtp@namkimgroup.vn
Webiste: www.namkimgroup.vn